Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Dafina Toncheva was recorded in August 2018.
Dafina Toncheva, Partner at US Venture Partners, is an expert in Cyber Security. We discussed a variety of topics including the shifting of Series A metrics to $2M – $3M ARR for SaaS companies.
Sramana Mitra: Tell us a bit about yourself as well as US Venture Partners. Where is the investment focus today? I know USVP has a long history of being in all different corners of the technology industry.
Dafina Toncheva: Currently, we’re investing in early stage software. That has been the focus for pretty much for the entire life of the firm. You’re right. We’re one of the first firms in the Valley. The first is 37 years old. It has had 11 funds. We’re currently investing out of fund 11. There have been three generations of investors. A lot of institutional knowledge has been built over the years. It’s something that I feel particularly proud of and grateful for as someone who’s been on the platform for five years.
Sramana Mitra: Where did you come from?
Dafina Toncheva: Originally, I’m from Bulgaria. That’s the accent you’re probably detecting. I moved here to the United States in 1998. I went to college here. I studied Computer Science and Applied Math. I ended up working as a developer for a few years at Microsoft on security projects.
By accident, I ended up in venture capital. I was recruited to Venrock by Ray Rothrock, the Managing Partner at that time. He recruited me into their two-year program for Principals. His request was to help him with his security portfolio. He was investing in security over 20 years. He had about 8 to 10 companies in various stages.
He recruited me in order to assist in developing that portfolio and also help with new investments. He promised me to teach me everything he could about venture, which I felt was a great deal for me. Right out of business school, I joined Venrock. I stayed there for a couple of years. I was really lucky. I made a few investments there that surfaced on the radar of other venture firms. I got recruited out of Venrock.
Over the last five and a half years, I have been here at USVP, which is somewhat similar to Venrock. We have many years of experience and do early-stage investing in software as well as healthcare investments.
Sramana Mitra: What is the current 11th USVP fund? What is its size? What check sizes are you writing?
Dafina Toncheva: The fund is $300 million. About 75% of that money goes towards software investment. For us, that is enterprise SaaS. That’s also cybersecurity and some consumer investment. The remaining 25% or so of the capital goes to healthcare and healthcare IT investment. We’re very selective as we make investments in a few medical device companies.
As I mentioned, we invest in companies that really redefine the healthcare sector. Our check sizes are traditional Series A. We write anywhere between $5 million to $7 million. We lead traditional Series A financing, which today is defined as between $5 million and $10 million. We always take a Board seat. We always lead. We try to buy and secure close to 20% ownership. We stay with the company until exit. We set aside reserves so that we can continue to be supportive partners. It’s very important to be business partners to the management team and not just be investors.